Google faces retaliation from China

One day after Google lifted restrictions on search results for users in China, there are signs that the Silicon Valley search giant may be facing consequences for its bold action. China's No.1 mobile carrier may put the brakes on making Google the featured search engine on its phones, and its No.2 carrier may halt plans to build an android phone. Android is a mobile phone operating system developed by Google.

Those are signs of trouble -- because Google won't censor search results.

"The risk really for Google is longer term. As the China market grows, the opportunity for them to participate in that growth kind of goes away," he said.

China could also deal Google a competitive blow, while helping its rivals.

"If China pulls back from the Android initiative, does that mean they put the full weight of their force behind these other competing platforms. Does this mean that, instead of iPhone and Android being the two dominant platforms, all of a sudden Windows Mobile 7 becomes primary platform because China decides to adopt that operating system," said Flurry.com Chief Tech Officer Sean Byrnes said.

Google is standing on principle.

"This is about a question of censorship and still trying to give the Chinese users the most possible information uncensored," Google spokesperson Bill Echikson said.

In doing that, Google could see its profits and stock value suffer.

"I think it's decided that the balance between the potential profit from being in the Chinese market against making a stand and perhaps doing a little bit of good in terms of moving the dialogue is worth it," John Linwood Battelle from Federated Media Publishing said.

It appears that China has already begun to censor results from the Google Hong Kong site, even though the Internet is open there.

"Hong Kong, when it was handed over in 1997 from the British, actually has complete autonomy in terms of the rule of law, freedom of expression, freedom of speech, freedom of the press, so in fact, all the Internet servers in Hong Kong can operate outside of the PRC, or Peoples' Republic of China, law," USC Director of New Media Andrew Lih said.